Central bank takes steps to cushion impact of pressure on rupiah

Nusa Dua, Bali (ANTARA News) – Bank Indonesia has taken steps to cushion rupiah against the impact of expected increase in the Fed fund rate in December.

“Certainly, the impact would be on all countries including Indonesia. One of the possibilities is that the US dollar would strengthen,” Deputy Governor of Bank Indonesia Hendar said after opening an international seminar held by Bank Indonesia and a number of Southeast Asia Central Banks here on Monday.

Preparatory steps are necessary as financial market players all over the world have been waiting for the policy of the US Central Bank as an indicator of global economy, Hendar said.

Bank Indonesia would take a measured action if the rupiah weakened or strengthened.

Foreign debt management is also a step by the central bank to mitigate risk of dollar strengthening against the US dollar, Hendar said.

“The fastest transmission is financial market especially in foreign exchange market. This is not the first time we are in such condition. BI has mitigate risks,” Hendar said.

Normalization of interest rate by The Fed has become an issue discussed at the seminar in addition to reports of bank centrals.

Hendar said the monetary policies of the central banks of advanced nations like The Fed and Bank of Japan to boost their economic growth had resulted in an increase in their balance sheet.

On the other hand , the expansive policy by the central banks of the advanced nations has resulted in stronger inflow of fund to developing economies like Indonesia.

Aware of the complexity of financial reports for central banks , Bank Indonesia and central banks of other Asian countries conducted research related to financial reports headed by Bank Indonesia and Bank of Thailand, Reserve Bank of India, Banko Sentral Ng of the Philippines, Central Bank of Srilanka and National Bank of Cambodia .

The result was the central banks agreed on the need for expansion of design of financial reports that could accommodate the uniqueness of central bank transactions to support transparency in the financial impact.

“Indonesia (BI) is lucky as it has been ahead . In this context we prepared central accountancy adopting a number of types of uniqueness of central banks such as in recording, book keeping.(*)